StirlingPrime Supermarket Investment

Back O’Hill Road FK8 1RA

&

Executive Summary■■ Stirling has established itself as the main retail and administrative centre in the

Stirlingshire region. It is strategically positioned in the heart of Scotland, with excellent

road communications via the M80 to Glasgow (42 km) and M9 to Edinburgh (58 km).

■■ Sainsbury’s is the dominant foodstore offer in the catchment by virtue of its size and

easy accessibility.

■■ The subject property comprises an 8,154.2 sq m (87,771 sq ft) supermarket with

good forecourt parking provision, a petrol filling station and a ‘drive-thru’ fast food

restaurant unit.

■■ The supermarket is let to Sainsbury’s Supermarkets Limited until 5th December 2036

(23.25 years unexpired) at a passing rent of £1,623,741 per annum which reflects

£18.50 per sq ft.

■■ The ‘drive-thru’ unit is let to McDonald’s Restaurant until 10th December 2024

at a passing rent of £90,000 per annum which reflects £27.87 per sq ft.

■■ The Sainsbury’s lease benefits from upward only RPI reviews every fifth year (next review

26th November 2014) with annual cap and collar of 4.00% and 1.50%.

■■ Absolute Ownership (Scottish Equivalent of English Freehold).

■■ The McDonald’s drive-thru unit is capable of being sold separately.

Offers are sought in the region of £40,000,000 (Forty Million Pounds),

subject to contract and exclusive of VAT for the freehold interest in the

property. The vendor will top up the Sainsbury’s rent to the next rent

review in November 2014 at the minimum collar of 1.50% to £1,867,038

per annum, giving a total rent of £1,957,038 per annum. A purchase at

this level reflects an initial yield of 4.62% based on purchaser’s costs

of 5.80%.

Rent/Yield Profile

Sainsbury’s Rent (topped up at min collar of 1.50%) £1,867,038 pa

McDonald’s Rent £90,000 pa

Total (Day 1) £1,957,038 pa

Net Initial Yield 4.62%

Estimated Sainsbury’s Rent as at Nov 2014 with 3% pa RPI £1,922,629 pa

McDonald’s Rent £90,000 pa

Estimated Total (Nov 2014) £2,012,629 pa

Net Equivalent Yield 4.75%

Net Reversionary Yield 4.76%

Page 2 Sainsbury’s & McDonald’s Stirling

A71

A71

A74

A82

A82

A84

A84

A85A82

A82

A85

A85

A91

A91

A90

A92

A92

A92

A91

A90

A73

A70

A68

A7

A1

A9

A9

A721

A726

A726A737

A737

A739

A811

A811

A725

A761

A721

A702

A702

A720

A902

A985

A876

A915

A701

A703

M77

M74

M74

M73M8

M80

M80

M90

M90

M90

M8

M8

M9

M9

M876

M8

Stirling

Glasgow

Perth

Carluke

Airdrie

Dunblane

Blackford

Dollar

Dunfermline

Cowdenbeath Kirkcaldy

GlenrothesKennoway

Ladybank

Newburgh

Luncarty

Methven

Leven

Kinghorn

Cumbernauld

Paisley

Bellshill

Stonehouse

Strathaven

Forth

Lanark

West Linton

Bonnyrigg

LivingstonBathgate

Shotts

Falkirk

Linlithgow

Alloa

Gorebridge

Newpot- on-TayRiver Tay

Cupar

Falkland

Milnathort

Crie�Loch Earn

Strathblane Kilsyth

Kirkintilloch

Eaglesham

Clydebank

EdinburghLeith

Glasgow

Edinburgh

Perth

Stirling

Carluke

Airdrie

Dunblane

Blackford

Dollar

Dunfermline

Cowdenbeath Kirkcaldy

GlenrothesKennoway

Ladybank

Newburgh

Luncarty

Methven

Leven

Kinghorn

Cumbernauld

Paisley

Bellshill

Stonehouse

Strathaven

Forth

Lanark

West Linton

Bonnyrigg

LivingstonBathgate

Shotts

Falkirk

Linlithgow

Alloa

Gorebridge

Leith

Newpot- on-TayRiver Tay

Cupar

Falkland

Milnathort

Crie�Loch Earn

Strathblane Kilsyth

Kirkintilloch

Eaglesham

Clydebank

LocationThe City of Stirling is the main administrative and financial centre for Stirlingshire. Situated in the heart of Scotland at Junctions 6 and 10 of the M9 and within close proximity to the M80. It is often referred to as the gateway to the Highlands. The city is approximately 10 km (6 miles) south of Dunblane, 13 km (8 miles) west of Alloa, 22 km (14 miles) north-west of Falkirk, 22 km (14 miles) north-east of Cumbernauld. Glasgow is located approximately 42 km (26 miles) to the south-west and Edinburgh 58 km (36 miles) to the east.

Stirling benefits from excellent rail links, with direct services to Perth,

Glasgow Queen Street and Edinburgh Waverley Stations, providing fast

journey times of 31, 40 and 59 minutes respectively.

Stirling’s strategic and accessible location, along with the exceptional

quality of life, has helped attract new residents, businesses and visitors.

The city has a very strong commercial base with further education, local

government and financial services making up the main employment

sectors. Major employers in the city include HSBC, Maxxium UK,

Gladedale Homes (Bett), Xafinity, Robertson Group and Cascade

Technologies. The University of Stirling employs over 1,400 staff with

approximately 12,300 students.

GRID REFERENCENS 79297 94644

POSTCODEFK8 1RA

Page 3Sainsbury’s & McDonald’s Stirling

A82

A82

A84

A84

A85A85

A91

A90

A91

A71

A92

A9

A9

A811

A811

A739

A985

A876

Dunblane

Edinburgh

Stirling

Glasgow

Dunfermline

Cowdenbeath

Perth

Cumbernauld

Stoneywood

Coatbridge

Dumbarton

Alexandria

Milngavie

Paisley

Falkirk

Alloa

Grangemouth

Linlithgow

Armadale

Whitburn

Broxburn

LivingstonDedridge

Inverkeithing

KirkintillochClydebank

Stirling

Glasgow

Dunfermline

Cowdenbeath

Edinburgh

Perth

Cumbernauld

Stoneywood

Coatbridge

Dumbarton

Alexandria

Milngavie

Paisley

Falkirk

Alloa

Dunblane

Grangemouth

Linlithgow

Armadale

Whitburn

Broxburn

LivingstonDedridge

Inverkeithing

KirkintillochClydebank

M80

M80

M90

M8

M9

M9

DemographicsThe Stirling Council area (which includes Dunblane, Bannockburn and Bridge of Allan) has a population of circa 90,770, an increase of 1% from 2010 to 2011. A significant increase in households is planned and the population is projected to increase by 16.1% to 104,292 people in 2035. This population growth is considerably ahead of the 10.2% projected increase in Scotland for the same period.

According to CACI Ltd approximately 50,343 people live within a 10 minute drivetime of the subject property

and this figure increases to around 180,558 people within a 20 minute drivetime. The close proximity of J10 of

the M9 ensures that the property draws upon a much wider catchment, covering much of north Stirlingshire.

SituationThe property is prominently located at the Drip Road and Back O’ Hill junction, in the suburb of Raploch, approximately 1.6 km (1 mile) east of J10 of the M9 and 1.4 km (0.9 miles) north-east of Stirling city centre. The suburb of Raploch has undergone a large scale regeneration program culminating in the construction of 900 new homes, the Stirling Campus of the Forth Valley College, the Raploch Community Council Campus and the subject development.

Approximately 1.6 km (1 mile) west of the subject property is Castle Business Park, Stirling’s premier business

location. The business park provides 22,500 sq m (242,000 sq ft) of modern office accommodation and has

attracted occupiers such as the NHS, Maxxium, HSBC and Robertson Group. On the opposite side of the M9

is Prudential’s Craigforth Campus which is one of their key UK offices employing approximately 2,500 people.

N10 Minute drivetime

20 Minute drivetime

30 Minute drivetime

Page 4 Sainsbury’s & McDonald’s Stirling

DescriptionThe main customer and service access to the property is from a dedicated spur road from Back O’ Hill Road. The overall site extends to 3.91 hectares (9.66 acres) and has a low site coverage of 21.84%. Sainsbury’s is situated towards the rear of the site, with the Petrol Filling Station and A3 Drive-Thru unit adjacent to the main entrance.

Sainsbury’sThe 5,542.4 sq m (56,429 sq ft) Sainsbury’s

Supermarket was purpose built in 2001. In 2011 the

store was refurbished and extended by 2,611.8 sq m

(28,113 sq ft) to provide 8,154.2 sq m (87,771 sq ft)

over ground and mezzanine levels. At the same time

Sainsbury’s installed a second mezzanine to house

the store’s café and customer toilet facilities, which is

treated as a tenant’s improvement.

The ground floor accommodation is primarily used for

food sales, with the 300 sq m (3,229 sq ft) mezzanine

used to store the plant and machinery. There are two

ATM machines at the store entrance and a 545 space

forecourt car park giving a good parking ratio of

1:14.96 sq m (1:161 sq ft).

The unit is of steel frame construction, with the

external walls a combination of timber cladding,

profiled metal cladding and brickwork.

The supermarket has three attractive profile metal

arched roofs incorporating translucent roof lights.

The front elevation incorporates extensive glazing

and a large customer entrance. The property also

benefits from a large service yard.

Petrol Filling StationThe petrol filling station comprises a canopied fueling

area with 12 pumps, a small convenience store, 4 car

parking spaces and a drive-thru car wash to the rear.

A3 Drive-Thru Unit The A3 Drive-Thru unit was purpose built for

McDonald’s in 2001. It is of steel frame construction

with red brick walls, glazing to the front and a pitched

slate roof. The unit benefits from 35 car parking spaces

and the drive thru element is to the rear.

TenureAbsolute Ownership (Scottish Equivalent of English Freehold).

AccommodationTenant Description Sq m Sq ft

Sainsbury’s Ground Floor Superstore 7,854.2 84,542

Mezzanine Superstore* 300.0 3,229

Total 8,154.2 87,711

McDonald’s Drive-Thru Restaurant 306.0 3,294

Number of Petrol Pumps

Sainsbury’s Petrol Filling Station 12

* Excluding tenant mezzanine installed during 2011 extension.

This plan is published for convenience of identification only. Any site boundaries are indicative only and should be checked against Title Deeds.

N

PFS

EPCAddress EPC Rating CO2 Emissions

Sainsbury’s Foodstore G 100.62

Sainsbury’s Petrol Filling Station D 60.08

McDonald’s Drive-Thru E 73.55

Page 5Sainsbury’s & McDonald’s Stirling

CovenantSainsbury’s Supermarkets LimitedSainsbury’s was founded in 1869 by John J Sainsbury when he opened his first store on Drury Lane in London. Over

the preceding 140 years, it has grown to become one of the UK’s largest retailers, with 487 convenience stores and

576 supermarkets, employing approximately 150,000 people worldwide.

Sainsbury’s Supermarkets Limited is a wholly owned subsidiary of J Sainsbury’s Plc. They are considered a “very low

risk” by Experian, who rate them with a Delphi score of 100. The most up to date financial information is as follows:

17/03/2012 (£000s) 19/03/2011 (£000s) 20/03/2010 (£000s)

Turnover/Sales £22,288,000 £21,100,000 £19,962,000

Pre-Tax Profit £1,114,000 £775,000 £562,000

Total Current Assets £1,735,000 £1,573,000 £1,140,000

Total Shareholders’ Funds £4,659,000 £4,067,000 £3,630,000

McDonald’s Restaurants LimitedMcDonald’s is the world’s largest fast food restaurant chain, employing one million people in 30,000 restaurants

in 119 countries. In the UK, there are 1,200 McDonald’s and over 85,000 people are employed by the company.

McDonald’s have plans to open a further 300 drive-thru restaurants across the UK over the coming year.

McDonald’s Restaurants Limited are considered a “very low risk” by Experian, who rate them with a Delphi score of

100. We have set out their latest financial information below:

31/12/2011 (£000s) 31/12/2010 (£000s) 31/12/2009 (£000s)

Turnover/Sales £1,248,549 £1,184,462 £1,129,957

Pre-Tax Profit £176,563 £157,211 £114,148

Total Current Assets £140,251 £61,406 £64,099

Total Shareholders’ Funds £488,460 £385,928 £243,225

TenanciesSainsbury’s

The supermarket and petrol filling station are let on a single lease to Sainsbury’s Supermarkets Limited until 5th

December 2036 giving an unexpired term of over 23 years. The passing rent is £1,623,741 per annum equating to

£18.50 per sq ft. The rent is subject to upward only RPI linked reviews on 26th November 2014 and every subsequent

fifth anniversary thereafter, subject to an annual cap and collar of 4.00% and 1.50%. Annual RPI for the next review is

as follows:

Period Index (reflecting minimum collar) Index (based on RPI estimate)

Oct 2009 – Oct 2010 4.54% (capped at 4.00%) 4.54% (capped at 4.00%)

Oct 2010 – Oct 2011 5.40% (capped at 4.00%) 5.40% (capped at 4.00%)

Oct 2011 – Oct 2012 3.19% 3.19%

Oct 2012 – Oct 2013 1.50% (minimum collar) 3.00% (RPI estimate)

Oct 2013 – Oct 2014 1.50% (minimum collar) 3.00% (RPI estimate)

Rent as at November 2014 £1,867,038 pa £1,922,629 pa

The lease includes a tenant right to renew for a further 25 years, expiring on 6th November 2061. Should Sainsbury’s exercise

this option, the new rent will be reviewed 5 yearly to Open Market Rent, but will disregard any tenant improvements.

McDonald’s

The drive-thru unit is let on a single lease to McDonald’s Restaurants Limited expiring on 10th December 2024 providing an

unexpired term of over 11 years. At the rent review in December 2009, the rent increased from £80,000 to £90,000 per annum.

There are further rent reviews to Open Market on 11th December 2014 and 11th December 2019.

Page 6 Sainsbury’s & McDonald’s Stirling

Stirling Foodstore ProvisionStirling currently has three foodstores over 2,787 sq m (30,000 sq ft). The nearest store and only one within a 5 minute drive time of the subject property is the Tesco at Wallis Street, around 1.1 km (0.7 miles) to the south east. National fast food operators have limited representation in the town with the closest drive-thru being the KFC at Craigs roundabout, approximately 2.4 km (1.5 miles) south east of the subject property.

SuperstoresSubject Property

Tesco Superstore FK8 1NP

Circa 4,738 sq m (51,000 sq ft) (1.1 km and approximately

5 minute drivetime to the south)

Waitrose FK7 7NZ

Circa 3,465 sq m (37,300 sq ft) (2.4 km and approximately

10 minute drivetime to the south).

Morrisons FK7 7UU

Circa 5,853 sq m (63,000 sq ft) (3.4 km and approximately

10 minute drivetime to the south east).

Aldi and Lidl are also present in the city. Otherswise the closest

foodstore provision is in Alloa.

1

2

3

4

StirlingStirling

King’s ParkKing’s Park

CambusbarronCambusbarron

St. NiniansSt. Ninians

BannockburnBannockburn

CowieCowie

FallinFallin

CausewayheadCausewayhead

M9

M9

M80

A905

A872

A811

A84

A91

A91

A907

A9

A9

A905

1

2

3

4

Page 7Sainsbury’s & McDonald’s Stirling

Proposal Offers are sought in the region of £40,000,000 (Forty Million Pounds), subject to contract and exclusive of VAT for the freehold interest in the property. The vendor will top up the Sainsbury’s rent to the next rent review in November 2014 at the minimum collar of 1.50% to £1,867,038 pa, giving a total rent of £1,957,038 per annum. A purchase at this level reflects an initial yield of 4.62% based on purchasers cost of 5.80%.

Misrepresentation Act 1967 and Property Misdescriptions Act

Cushman & Wakefield LLP for themselves and for vendors or lessors of this property whose agents they are, give notice that :

1 The particulars are produced in good faith, are set out as a general guide only and do not constitute any part of a contract.

2 No person in the employment of the agent(s) has any authority to make or give any representation or warranty whatever in relation to this property.

3 This property is offered subject to contract and, floor areas, measurements or distances given are approximate and unless otherwise stated, all rents are quoted exclusive of VAT.

4 Nothing in these particulars should be deemed to be a statement that the property is in good condition or that any services or facilities are in working order.

5 Unless otherwise stated, no investigations have been made regarding pollution or potential land, air or water contamination. Interested parties are advised to carry out their own investigations if required.

Stirling | Sainsbury’s & McDonald’s | September 2013 | Ref: 11293Designed and produced by THE GROUP www.completelygroup.com

ContactsFor further information please contact:

Steven NewlandsT: 0131 226 8756E: steven.newlands@eur.cushwake.com

Patrick KnapmanT: 020 7152 5019E: patrick.knapman@eur.cushwake.com

Kyle JossT: 0131 226 8759E: kyle.joss@eur.cushwake.com

VATThe property has been elected for VAT and therefore VAT will be payable on the purchase price. However it is anticipated that the sale will be

treated as a Transfer Of a Going Concern (TOGC).

Rent/Yield Profile

Sainsbury’s Rent (topped up at min collar of 1.50%) £1,867,038 pa

McDonald’s Rent £90,000 pa

Total (Day 1) £1,957,038 pa

Net Initial Yield 4.62%

Estimated Sainsbury’s Rent as at Nov 2014 with 3% pa RPI £1,922,629 pa

McDonald’s Rent £90,000 pa

Estimated Total (Nov 2014) £2,012,629 pa

Net Equivalent Yield 4.75%

Net Reversionary Yield 4.76%